Visit vanguard.com or contact your broker to obtain a Vanguard ETF or fund prospectus which contains investment objectives, risks, charges, expenses, and other information; read and consider carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investments in bond funds are subject to interest rate, credit, and inflation risk.

Diversification does not ensure a profit or protect against a loss in a declining market.

April is here, and, for some, it’s a time to welcome spring. For others, it means a race against the clock to get their 2013 tax return done before the April 15 deadline. And part of that process frequently involves an IRA contribution.

My colleague Steve Weber and I have begun to research the behavior of Vanguard IRA investors. So far the findings have been quite interesting and hold lessons for many of us who are saving for retirement. I’d like to share a few that are particularly relevant as we close out the 2013 tax season (and start the 2014 IRA contribution window).

Are you investing up to the max? Our research shows that more than half of Vanguard investors who make a contribution do so to the max. This is terrific news! But the fly in the ointment is that, in 2008, the last year IRA contribution limits went up, many investors failed to take advantage of the increase. This may be due to lack of awareness. And while an additional $500 may seem trivial, over the course of a 30-year savings horizon, for example, the amount could triple in value.

Combine your decisions

Second, IRA contributions made during “tax season” tend to get parked in a money market account. While this seems reasonable on the surface, we found out that those contributions end up staying there for longer than intended and become an unplanned long-term investment.

Most likely, IRA investors are decoupling their contribution and investment decisions. To avoid this trap, consider taking a page from employer sponsors who are increasingly making target-date funds their default option for plan participants. The advantages of balanced funds are enduring—they’re low cost, diversified, professionally managed—and they provide for growth potential that a money market doesn’t, making them an appropriate long-term retirement investment.

Be an early bird

Last, if you’re one of those last-minute IRA contributors, you’re not alone. Our research found that the cohort of IRA investors making last-minute contributions (i.e., the last two weeks of the tax-filing year) was twice as large as their “early bird” counterparts who made their investment when they were first eligible in January of the prior year.

Is it procrastination? Probably. While we can debate the reason, there’s no debate that procrastination has a cost. Investing early in the tax year means that the compounding clock starts sooner rather than later. And, over the course of your working years, the procrastination “penalty” can really add up. So, if you fall in this camp, see if you can make a change this year and do your 2014 IRA contribution now.

The key takeaways from Vanguard’s new IRA research so far? Contribute the max (and the max went up for 2013), consider a target-date fund or balanced fund, and contribute early in the tax year. These tips are simple and sound, and can make tax season a little less daunting for many of us.

Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the Fund name refers to the approximate year (the target date) when an investor in the Fund would retire and leave the work force. The Fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in the Target Retirement Fund is not guaranteed at any time, including on or after the target date.

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.

Maria Bruno

Maria is a senior retirement strategist in Vanguard Investment Strategy Group. She leads a global team that's responsible for conducting research and providing thought leadership on the topics of retirement, wealth, portfolio construction, and financial planning for individual investors. Maria specializes in retirement planning, retirement income solutions, and wealth management strategies. Prior to her current role, Maria worked in our financial planning and advice departments. Maria earned a bachelor of science in business administration (B.S.B.A.) from Villanova University and is a Certified Financial Planner™ professional.

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Visit vanguard.com or contact your broker to obtain a Vanguard ETF or fund prospectus which contains investment objectives, risks, charges, expenses, and other information; read and consider carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investments in bond funds are subject to interest rate, credit, and inflation risk.

Diversification does not ensure a profit or protect against a loss in a declining market.